Share this:

Teresa Rojo, 62, of Rialto, addresses CalPERS board members during a committee meeting Tuesday, April 18. Rojo is one of nearly 200 retirees of the East San Gabriel Human Services Consortium whose pensions will be reduced later this year. (Screengrab of CalPERS meeting webcast)

“I will not be able to financially recover from the loss,” one of the retirees, Teresa Rojo, 62, of Rialto, told California Public Employees’ Retirement System board members. “Please don’t throw away our futures. We have held our end of the bargain. We, as retirees, don’t deserve not to have what’s left of our lives thrown away.”

In March, the CalPERS board voted to terminate its contract with the East San Gabriel Human Services Consortium and begin the process of slashing pensions for 197 retirees of the job training agency, which had failed to make payments on retirees’ pensions for more than a year.

Unless the consortium pays a $19.3 million fee, which would fully fund current and future payments of retirement benefits to members, pension benefits will be reduced by about 63 percent for 191 retirees and 24 percent for six retirees starting July 1, 2017, according to CalPERS.

The reductions will likely be devastating for the retirees, many of whom fear losing their homes, filing for bankruptcy and not being able to pay for future medical treatments.

But board members, citing factors not fully in their control, did not give retirees the answers they were looking for.

“I’m sorry to all of you,” California Public Employees’ Retirement System board member Michael Bilbrey told retirees during the board’s finance and administration committee meeting in Sacramento. “If we had it in our own pockets we would give it to you but we don’t.”

The consortium, known as LA Works, was formed as a joint-powers authority in 1979 by the cities of West Covina, Azusa, Glendora and Covina. The agency laid off its employees and shut its doors in 2014 after Los Angeles County took away its funding amid a billing dispute.

In August 2015, the consortium stopped paying CalPERS its monthly contribution to fund members’ retirement benefits and accrued more than $400,000 in liabilities.

Consortium officials have said they have no funds to pay and that the cities are not legally obligated to pay for the agency’s debts.

During the meeting Tuesday, retirees questioned why the retirement system could not use its Terminated Agency Pool to pay the full pensions for the consortium employees.

“We’re just asking for someone ethically to step forward and help us,” said retiree Stephen Martinez. “I don’t come here to blame you. You may not have started the problem, but you possibly have the means to provide the solution.”

As of June 30, 2015, the pool was funded at 248.3 percent and was supporting pension benefits for 1,051 retirees from 93 terminated agencies, according to CalPERS documents.

Most of the agencies that are moved into the TAP first pay an estimated amount needed to support employee pensions. Because the consortium is unable to pay the estimated $19.3 million needed to fund its employees’ future and current retirement benefits, CalPERS would have to fully fund the retirees’ pensions in order to avoid the reductions.

But doing so would negatively impact the “actuarial soundness” of the fund and could put other retirees’ benefits at risk, board members said.

“My heart goes out to all of you, but we need to remember that PERS has no money,” said board member JJ Jelincic. “The assets are all in trust funds. They are all somebody else’s money. What we do with that is not really our choice.”

CalPERS has allowed other agencies to move into the TAP without full funding before, officials said, but those agencies had only a few employees and were short by $1 million or less.

“That’s one one-hundredth of the liabilities in this case,” said CalPERS Chief Actuary Scott Terando, adding that there are other risks to the TAP’s soundness that the agency can’t control, such as changes in mortality. “The soundness of the plan today we talked about it being healthy. That situation changes. We don’t want to make the situation worse by speeding up the process and eliminating any contingency reserves.”

Stephanie K. Baer is a general assignment reporter covering the San Gabriel Valley. Baer has written about crime, local government, politics and public health. Her reporting on flaws in Los Angeles County's restaurant grading system prompted officials to change the way they issue health grades to retail food facilities. As part of a fellowship program at USC Annenberg School for Communication and Journalism's Center for Health Journalism, she wrote an in-depth series about the dangers of blue-green algae toxins in California. A Bay Area native and UC Berkeley graduate, Baer has worked for the Chicago Tribune and the Milwaukee Journal Sentinel. She was editor-in-chief and president of her college newspaper, The Daily Californian.

Stephanie K. Baer is a general assignment reporter covering the San Gabriel Valley. Baer has written about crime, local government, politics and public health. Her reporting on flaws in Los Angeles County's restaurant grading system prompted officials to change the way they issue health grades to retail food facilities. As part of a fellowship program at USC Annenberg School for Communication and Journalism's Center for Health Journalism, she wrote an in-depth series about the dangers of blue-green algae toxins in California. A Bay Area native and UC Berkeley graduate, Baer has worked for the Chicago Tribune and the Milwaukee Journal Sentinel. She was editor-in-chief and president of her college newspaper, The Daily Californian.